The DCF calculation involves several key steps: 1. Project Future Cash Flows: Estimate the business’s future cash flows over a specified period. This often involves creating detailed financial projections based on market research, competitive analysis, and business strategies. 2. Determine the Discount Rate: This rate reflects the risk associated with the investment and is often equivalent to the business’s cost of capital or required rate of return. 3. Discount the Cash Flows: Apply the discount rate to each future cash flow to convert it to its present value. 4. Sum the Present Values: Add up all the discounted cash flows to arrive at the total present value, which represents the business’s valuation.